Bush and Congress should lift environmental restrictions on energy production

By Andrew Bernsteinweb posted May 29, 2006

With American consumers currently paying the highest gasoline prices in recent history, and after another winter of high heating costs, many Americans are properly concerned about America's energy future. Predictably, many politicians and commentators blame the "greed" of U.S. energy companies for the soaring prices. The truth, however, is that prices rise when demand increases relative to supply, and that the American supply of energy is being strangled by the policies of U.S. federal and state governments.

A prime example of such strangulation is the moratorium on offshore drilling for oil and natural gas imposed on 85 percent of America's coastal waters for the past quarter century. Earlier this month, when the House rejected an attempt to lift the moratorium, it sent a powerful message that the strangulation will continue.

Let us examine some of the other policies that have brought America -- a country blessed with abundant natural resources and possessing the technology to produce energy more efficiently than ever -- to a state of energy poverty.

In addition to the moratorium on offshore drilling, the federal government repeatedly refuses to permit oil drilling in Alaska's National Wildlife Refuge (ANWR). Geologists claim that ANWR holds seven billion barrels of oil, enabling it to add significantly to American energy production. Further, in large measure due to environmental restrictions, America has not built a new oil refinery for more than 25 years, meaning a diminished ability to refine crude oil into gasoline, diesel, jet fuel, heating oil, and other petroleum products. Our refineries run at capacity constantly, making repairs difficult, leaving them more susceptible to breakdowns and fires, and -- with most centered in the Gulf of Mexico -- leaving the country's supply of refined oil vulnerable to such natural disasters as Katrina.

Additionally, regulations have made building new nuclear power plants economically uninviting -- despite the fact that nuclear plants, operated in free countries, where top minds are liberated to create advanced technology, have proven their reliability and safety. In France, for example, nuclear power provides roughly two-thirds of the nation's electricity. American nuclear plants have had, and continue to show, a superb safety record -- and this includes Three Mile Island, whose 1979 partial meltdown led to no deaths or injuries.

Finally, environmental restrictions also limit production of natural gas, which currently supplies 25 percent of the energy Americans consume, a figure that will rise in the future. Huge natural gas reserves in places such as the Rocky Mountain basins, Alaska, and the Outer Continental Shelf are either "off limits" or have their development severely restricted. These unnecessary restrictions endure despite the fact that the wholesale price of natural gas has quadrupled since the 1990s. As an example of the hurdles placed in front of natural gas companies, producers in Wyoming's Powder River Basin, which holds 39 trillion cubic feet of gas, several years ago saw the federal government suspend the issuing of drilling permits pending the outcome of a second "environmental impact" study. Is this kind of treatment going to encourage more companies to get into the energy business?

The United States is a country rich in both energy sources and the technology necessary to develop them. But the policies of our own government are preventing such development from occurring. America needs to learn from the bitter experience of England. Last century, a popular expression "taking coals to Newcastle" (a center of English coal production) was coined to indicate the absurdity of taking a product to a place that was plentiful in it. But in the late 1940s, when the British government nationalized the coal industry, shortages and rationing resulted, and taking coal to Newcastle became a grim reality. Similarly, the United States today, with its enormous supplies of oil, natural gas, and other energy sources, is suffering high prices because of restrictions imposed by our government.

If the U.S. government established freedom in the energy industry by removing environmental restrictions, we would witness a significant increase in domestic production of oil, natural gas, and electricity. This would do more than increase supply and lower prices for American customers. It would herald a new commitment by the U.S. government to economic freedom and capitalism. The relative freedom of the computer industry has led to an explosion of innovativeness and productivity. The same freedom in the energy industry will lead to the same result.